The Way Forward for Social Safety Nets

Transcription

1 Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa Arab Forum on Rethinking the Roles of the State, Market and Civil Society in the Provision i of Basic Social Services ESCWA Beirut, Lebanon December 19, 2012 World Bank Human Development Department Middle East and North Africa Region

2 Objectives of the report Main objectives (i) Enhance knowledge about SSNs and identify new and emerging challenges to MENA s poor and vulnerable Bringing new evidence, data, and country-specific analysis (ii) Open up and inform a debate on feasible policy options to make MENA SSNs more effective and innovative. To try to address these questions: 1. What are the key challenges of the poor and vulnerable in the Middle East and North Africa that call for renewed SSNs? 2. To what extent are the region s SSNs achieving their goals of promoting social inclusion, livelihood, and resilience to crises? 3. Which SSN reforms do the region s citizens want? 4. What types of policies can be part of the agenda for SSN reform, and how could these policies i be developed d for maximum effectiveness? 2

3 Motivation Recent economic and social transitions in the MENA region have renewed demand for social safety nets (SSNs) that promote: i. Social inclusion, by building human capital, ii. Livelihood, by protecting against destitution, and iii. Resilience, by helping households navigate the effects of risks. Sustained economic growth in MENA countries pulled some out of poverty, but did not reach many others who are still poor, unemployed, disabled and/or ill. In addition, many families in MENA are vulnerable to economic shocks, natural disasters, and other crises. Around the world, 70 percent of SSN programs were introduced after a major transition. What are SSNs (welfare or social assistance)? They are non-contributory transfers targeted to the poor or vulnerable, including: Income support Temporary employment programs (workfare) Services that build human capital and expand access to finance 3

4 1. A Framework for SSN Reform 4

5 MENA stands at a turning point and SSNs are under increased scrutiny said yes % who Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed? In your country, are you satisfied or dissatisfied with efforts to deal with the poor? United Arab Emirates Kuwait Saudi Arabia Bahrain Tunisia Jordan Yemen, Rep. Egypt, Arab Rep. Morocco 0 Jordan Tunisia Egypt, Arab Rep Source: Gallup Lebanon % satisfied Source: Gallup

6 A Framework for Renewed SSNs in MENA Social Safety Nets to promote Inclusion Livelihood E M P O W E Increasing human capital and building assets of the poor Protecting against destitution, mitigating gpoverty R Resilience Helping households navigate the effects of shocks P E O P L E Conditional cash transfers If condition induces behavior change Workfare Assets must be of value Fee waivers for access to services Other costs might limit access Cash transfers Flexible, need operative systems Price subsidies Costly, creates distortions In kind transfers Costly to implement and operate

7 2. The Challenges that Call for Renewed SSNs 7

8 Poverty: Two groups are at a particular risk of poverty Children Rural residents 40% Child (0 14) poverty rate Overall Poverty Rate Urban Rural 35% Jordan 30% 25% 20% 15% 10% Tunisia Egypt, Arab Rep. Iraq 5% 0% Yemen, Rep. Egypt, Arab Iraq 2009 Morocco 2006 Rep a Note: Poverty rates are based on national poverty line for all countries except Morocco. a: Poverty line defined as the bottom quintile cutoff. Source: Authors calculations, based on data from latest available household surveys. Yemen, Rep. Jordan Poverty rate (%) Note: Poverty rates are based on national poverty lines. Source: Authors calculations, based on data from latest available household surveys. Children in MENA are particularly at risk of poverty (both in low income and some middle income countries). 8

9 Poverty: Children s human development outcomes are still lagging Malnutrition Rates by country Incidence of stunting versus GDP per capita (PPP) % of chil ldren under Underweight Wasting Stunting Iran, Islamic Re ep. Tuni Saudi Ara Qat tar sia bic Bahra ain Jord dan Om man Alge eria Leban on Un ited Arab Emirat tes Lib bya Moroc cco Kuw wait Ir raq Sy yrian Arab Repub blic Egypt, Arab Re ep. Djibo uti Yemen, Re ep. Source: Adapted from World Bank 2010 Health Report. Stunting and underweight rates from WHO World Health Statistics Wasting rates from UNICEF Rates are based on 2006 WHO Child Growth Standards. Source: Authors calculations, based on malnutrition data from UNICEF 2009; GDP per capita data from World Bank 2012c. 9

10 Poverty: Children s human development outcomes are still lagging, continued Djibouti Iraq Syrian Arab Republic Saudi Arabia Middle East and North Africa Egypt, Arab Rep. Algeria West Bank and Gaza Jordan Oman Iran (Islamic Republic of) Developing countries World Bahrain Morocco Kuwait Lebanon United Arab Emirates Pre primary school gross enrollment ratio, Source: UNICEF 2012 Child Info database, oup % of relevant age gr Primary completion rates MENA GCC MENA non GCC Source: Data from latest available MICS and DHS. 10

11 Poverty: Low-quality jobs and informality lock families in poverty traps Informality rates by quintile of per capita consumption Poorest q q3 q4 20 Richest 0 Yemen, Rep. Morocco Syria Lebanon Source: Angel-Urdinola and Tanabe

12 Vulnerability: Many are at risk of falling into poverty during shocks and crises Many in MENA live just above the poverty line, and are vulnerable to poverty Most expenditures of the poor and vulnerable are committed to essentials % of people living between USD/day Expenditure composition income quintile, Egypt, Arab. Rep. Egypt, Arab Rep. Yemen, Rep Richest Food Iraq Djibouti Syrian Arab Republic Algeria Morocco Iran, Islamic Rep. Tunisia Jordan Poorest Rent Utilities Education Health Clothes Telecom other Source: Calculations from PovcalNet,. Source: Data from Egypt HIECS

13 Vulnerability: Low resilience to shocks due to ineffective coping strategies Unexpected illness or disability of a family member can plunge a household into poverty Lack of reliable safety nets forces households to turn to other coping strategies 14% 12% 10% 8% 6% % of households incurring catastrophic health care expenditures As a coping mechanism to one or more of the aforementioned problems, during last 12 months, has the household: Received help from Gov. or NGO Sold/pawn assets Received help from 4% 2% 0% West Bank Egypt, Arab Yemen, and Gaza Rep. (2007) Rep. (2005) (2005/06) Libya (2003/04) Tunisia (2005) Lebanon (2004/05) Source: World Bank 2010c; data from national household surveys. Note: Catastrophic health care expenditures are defined as expenditures exceeding 10 percent of a household s total expenditures or 40 percent of expenditures net of food spending. Asked for loan Morocco Received help from Family Iraq Used own income or savings Households answering yes, % Source: Data from IHSES, Iraq 2009, and MHYS, Morocco

14 Social Exclusion: Inequitable access to social services and job opportunities Women: Low labor market participation, not necessarily out of choice o Weak support systems (such as public transportation and child care services) o Lack of empowerment o Educational disadvantages o Wage discrimination i i and gender segregation in various industries i Disability: High unemployment rates, inaccessible and unaffordable healthcare, low educational attainment, inaccessible transportation and infrastructure, and stigmatization resulting from disability Displaced people Region hosts almost half of all registered externally displaced people Integration varies by country, often: higher education and health costs; restricted access to profession; restricted mobility 14

15 Key Messages Despite continued economic growth, many challenges remain for the poor and vulnerable In the absence of SSNs that effectively promote human capital formation among the poor and protect against destitution, these trends might be perpetuated. Important vulnerabilities persist If effective SSN are not in place, the vulnerable might engage g in coping strategies that deplete their human capital. Inequitable access to social services and job opportunities To promote inclusion (for e.g. women, people with disabilities, and displaced people), SSN program design can be modified to engage these groups. 15

16 3. The current state of SSNs in MENA 16

17 Universal subsidies at the expense of more effective programs The average MENA country spends 5.7 percent of GDP on food and fuel subsidies, as opposed to 1.3 percent of GDP in the average benchmark country. 15 Expenditure on subsidies (fuel and food) and transfers (cash & in kind) as a % GDP 12 % of GDP Food and fuel subsidies Nonsubsidy SSNs Sources: Authors calculations based on Government of Jordan 2011a; World Bank 2009; World Bank 2010a; World Bank 2011b; World Bank 2011c; IMF Fiscal Affairs Department database. 17

18 Subsidies aside, SSNs in MENA are small and fragmented Number of non-subsidy SSNs by program type Source: Authors calculations based on Middle East and North Africa SSN Inventory. 18

19 Coverage of non-subsidy SSN is low in MENA intile Per rcentage covere ed in bottom qui Nationwide coverage of non-subsidy SSNs in MENA (% of bottom quintile population) Sources: Middle East and North Africa: Authors calculations based on national household surveys. Other regions: World Bank 2012a. With less than a third of the bottom quintile covered in most MENA countries, the majority of the poor fall through the cracks in the safety net 19

20 Predominance of categorical and geographical targeting in MENA Source: Authors calculations based on Middle East and North Africa SSN Inventory. Categorical and geographical targeting do not perform well when poverty is multi-faceted and spatially dispersed, in which case methods that identify households or individuals based on their means or correlates of poverty (Proxy means tests - PMT) are preferable. 20

21 Generosity of non-subsidy MENA SSNs is generally low Benefit generosity of non-subsidy SSNs in MENA relative to other regions re of beneficiary ts as % of welfa Benefit Sources: Middle East and North Africa: Authors calculations based on national household surveys. Other regions: World Bank 2012a. Non-subsidy SSN transfers in Iraq, Egypt, and Yemen constitute less than a fifth of the bottom quintile s welfare Benefit generosity of SSNs in Yemen and Egypt can be increased without triggering significant work disincentives 21

22 Most non-subsidy SSNs in MENA have a limited effect on poverty and inequality SSN im mpact on povert ty rate, % Poverty Impact of SSNs in MENA 0 West Bank Jordan Egypt, Iraq 2007 Yemen, Mid. East World E. Asia & Eur. & L. Amer. & and Gaza 2010 Arab Rep. Rep & N. Africa Pacific Cent. Asia the Sources: Middle 2009 East and North Africa: 2009 Authors calculations based on national household surveys. Other regions: Caribbean World Bank 2012a. Poverty and inequality impact of MENA s SSN is very minimal o SSN in MENA perform worse on poverty than the average for the world, ECA, or LAC o Most MENA SSNs do not have much impact on the distribution of welfare either, although SSNs in West Bank and Gaza outperform the rest of MENA and other regions. Low coverage, poor targeting, and insufficient generosity of SSN in MENA account for their small impact on poverty and inequality 22

23 Universal subsidies are inefficient and pro-rich Universal subsidies (and in particular, fuel subsidies) have staggering leakages to the non-poor 70 Total subsidy ben nefits, % Poorest quintile Q2 Q3 Q4 Richest quintile Iraq 2007: food ration cards Egypt, Arab Rep., 2009: fuel subsidies Jordan, 2010: food subsidies Yemen, Rep., 2005: fuel subsidies Jordan 2010: fuel subsidies

24 but many people depend on them to stay out of poverty Subsidy impa act on poverty ra ate, % Poverty Impact of Subsidies Food subsidies Ration cards Fuel subsidies Food, gas, water subsidies Petroleum subsidies Egypt, Arab Rep Iraq 2007 Egypt, Arab Rep Jordan 2010 Yemen, Rep Food subsidies in Egypt and food ration cards in Iraq reduce poverty incidence by about 30 percent This implies that sustainable subsidy reform would be preceded by expansion of non-subsidy SSNs that promote livelihood and resilience 24

25 SSN performance during the 2009 crisis Most MENA countries responded to the 2009 food, fuel, and financial crisis, and to the post Arab Spring unrest by scaling up universal price subsidies and increasing public sector wages o These solutions are costly, difficult to remove, and have significantly amplified fiscal pressures (e.g. Egypt, Jordan). o Increasing public sector wages excludes the most vulnerable target groups (unemployed and informally employed) while subsidy increases benefit the rich more than the poor. Many governments chose these solutions due to the lack of existing effective SSN that could be rapidly scaled up o Existing poverty-targeted SSNs were not flexible enough to expand quickly o Lack of poverty data and systems to target and deliver other types of benefits limited governments ability to respond quickly Safety nets are needed at all times, and having them in place before a crisis makes the response to crisis more effective. 25

26 Key messages 1. Universal subsidies consume the lion s share of SSN spending in MENA, siphoning resources away from more efficient and effective SSN instruments. 2. Low coverage, poor targeting, and insufficient generosity of non-subsidy MENA SSNs explain their relatively small impact on poverty and inequality. 3. Sustainable reform of inefficient subsidies (especially fuel subsidies) can be done if the poor and vulnerable are adequately compensated 4. Weak and unreliable SSNs in MENA are unable to shield the poor and vulnerable in times of systemic shocks like the recent crises.

27 4. Political economy of SSN reforms: What do citizens want? 27

28 Turning on the light on citizens' preferences An informed dialogue with citizens will help policy makers in renewing social safety nets The report generated new information on: Citizens assessment of existing social safety nets Social preferences for redistribution Preference for the design of SSNs Preferences and attitudes toward subsidy reform Nationally representative opinion surveys in Egypt, Jordan, Tunisia and Lebanon, linked to Gallup World Poll Social Protection Evaluation of Attitudes, Knowledge, and Support (SPEAKS) 28

29 Citizens want government to be the main provider of SSNs Who should be most responsible for the poor in your country? Responses, % Egypt, Arab Rep. Lebanon Jordan Tunisia Government Family and friends Religious org. Charitable org. No group 29

30 But governments are seen as ineffective in providing SSNs ffective in dents what or very e, % of respond nment somew roviding SSNs, Govern pr Egypt, Arab Rep. Lebanon Jordan Tunisia Q1 Q2 Q3 Q4 Q5 On average, 21.5% of Lebanese think the government is very or somewhat effective in providing SSNs, and 30% in Egypt, 66% in Jordan, 61% in Tunisia 30

31 What do citizens know about SSN? Awareness varies by country, but is generally higher among the rich 5 of SSN program ms recognized by respondents s Average no Q1 Q2 Q3 Q4 Q5 Egypt, Arab Rep. Lebanon Jordan Tunisia 31

32 Which citizens know about SSN? The poor in Lebanon and Tunisia are less likely to know a SSN recipient Average number of SSN programs for which respondents knew a beneficiary, by income quintile grams where meone who has stance umber of SSN prog ondent knows som received assis Nu respo Egypt, Arab Rep. Lebanon Jordan Tunisia Q1 Q2 Q3 Q4 Q5 Knowing someone who participates in a SSN program is an (imperfect) proxy for the level of leakage With some reasonable assumptions, if wealthier respondents are more likely to know people in SSN programs than poor respondents, this suggests leakages of benefits to the non-poor 32

33 What do citizens want? Poverty-targeted cash transfer programs, rather than categorical in-kind benefits Poverty vs. categorical targeting Cash vs. in-kind f respondents preference, % of Targeting Egypt, Arab Rep Lebanon Jordan Tunisia Bene efit preference, % of respondents Egypt, Arab Rep. Serving specific groups of people p Serving the poor Goods (food, clothes, etc.) Lebanon Jordan Tunisia Cash

34 What do citizens want? Few people think that SSNs should be conditional on some recipient behaviors Should SSN beneficiaries be required to do something in exchange for receiving SSN or should there be no requirements? Egypt, Arab Rep. Lebanon Jordan Tunisia No requirements Some requirements % perferred conditio onality 50% 40% 30% 20% 10% 0% Poor Lower middle Upper middle & Egypt Lebanon Jordan rich Tunisia Almost 1/3 of citizens would support conditionality and such support increases somewhat with wealth

35 The top two preferred conditionalities were school attendance for children and active job search e % preferred conditioning on (of thos who prefe erred condit tionality) 100% 90% 80% 70% 60% Sh School Mdi Medical Job training i Actively search Participate i in attendance checkups courses for work public works Egypt Lebanon Jordan Tunisia

36 What about subsidies? Awareness of food subsidies is higher than of fuel subsidies. Egypt: Lebanon: idy % aware of the subsi % aware of the subsi idy Q1 Q2 Q3 Q4 Q5 0 Q1 Q2 Q3 Q4 Q5 Gasoline Diesel LPG Baladi bread Sugar Cooking oil Mazoot (diesel) Tobacco (growers' subsidy) Bread / wheat flour Jordan: Tunisia: subsidy % aware of the s subsidy % aware of the s Q1 Q2 Q3 Q4 Q5 0 Q1 Q2 Q3 Q4 Q5 Bread / wheat flour Diesel Electricity Gasoline LPG / gas cylinders Water Bread / wheat flour Sugar Diesel Semolina Cooking oil 36

37 Opposition to reforming subsidy varies by country, and it is high in Egypt and Jordan reform fo or % opposed to subsidy an ny product Poor Lower middle Upper middle & rich Egypt Lebanon Jordan Tunisia

38 Most people are more tolerant of non-food subsidy removal Preferred product to reform Tunisia Jordan Lebanon Egypt Cooking oil Sugar Baladi bread LPG Diesel Gasoline Tabacco (growers) Bread/flour Mazot (diesel) Gasoline Water Electricity LPG/gas cylinders Diesel Bread/flour Diesel Cooking oil Sugar Semolina Bread/flour

39 Most citizens would rather convert subsidies into cashbased transfers targeted to the poor How the subsidies savings could be spent? Cash transfer to: 80 % Egypt Lebanon Jordan Tunisia Only the poor All exc. wealthy All Ony the poor + health & education

40 Key Messages Citizens want government to be the main provider of SSNs, but governments are seen as ineffective in providing SSNs. Citizen awareness of SSNs is low among the poor. Citizens prefer poverty-targeted cash transfer programs, rather than categorical, in-kind benefits. Opposition to reforming subsidy varies by country, and is high in Egypt and Jordan, but most people are more tolerant of non-food subsidy removal. Most citizens would rather convert subsidies into cash-based transfers targeted to the poor. (a) much scope remains to increase support for reform by raising awareness on existence and true cost of subsidies; and (b) customizing the design of renewed SSNs can help to shift public opinion in favor of SSN reform. 40

41 5. The way forward: How to make MENA SSN more effective and innovative 41

42 Agenda for renewed SSNs in MENA (i) Improve the impact of SSN programs (ii) Establish a reliable yet flexible SSN infrastructure (iii) Consolidate fragmented SSN programs (iv) Rebalance financing and priorities of SSN systems 42

43 Way forward: (i) Improve the impact of SSN programs Prioritizing interventions that promote investment in human capital By scaling up successful programs, tweaking existing programs, and creating new programs Enhancing targeting toward the poor and vulnerable By using poverty-targeting as preferred by MENA citizens Improving the focus on results in SSN programs through M&E and social accountability Reaching out to other stakeholders (citizens, NGOs, CSOs, private sector, and nonprofits) Comprehensive communication campaigns can improve awareness about SSNs Resources of other stakeholders can be leveraged for financing and implementation 43

44 Way forward: (ii) Establish a reliable yet flexible SSN infrastructure Improving SSN infrastructure Creating unified registries of beneficiaries Utilizing effective service delivery mechanisms The recent global crisis underscored the weak capacity of existing SSN systems in MENA in promoting households resilience to shocks. To effectively fulfill this function through SSN requires a strong administrative infrastructure. Having this infrastructure in place ahead of a crisis allows for quicker and more efficient development of remedial and mitigation actions, such as scaling up of benefits for the most vulnerable or expanding coverage. 44

45 Way forward: (iii) Consolidate fragmented SSN programs International experience suggests having a few comprehensive programs, specifically designed to reach different segments of the poor and vulnerable. Linking the programs beneficiaries with social insurance systems can leverage their impact. Consolidating existing small and fragmented SSN programs Identify gaps in SSN systems Create an inventory of SSN programs with program objectives, eligibility criteria, and benefit type Identify programs that can be expanded or consolidated Formulate a strategy for implementation of the reform 45

46 Way forward: (iv) Rebalance financing and priorities of SSN systems Increasing spending and improving coverage of non-subsidy SSN to protect against destitution Demonstrate readiness to deliver effective and inclusive nonsubsidy SSN programs as a first step on the path towards comprehensive subsidy reform Reforming price subsidies through wholesale or internal reforms Improving subsidy targeting Identifying most sensitive subsidies and focusing instead on most regressive ones Engaging citizens early on the dialogue on comprehensive reforms and promote awareness through information campaigns. 46

47 For further engagement Report website: MENA Blogs on the report: org/who pay poorest lebanon Facebook: com/worldbankmiddleeastnorthafrica Gallup.com article on MENA SPEAKS: p p p g help-poor.aspx Press release: 47